Efficient financial management is key to running a successful business enterprise. It is an essential vehicle for both survival and growth, and is fundamental to orchestrating the most effective use of resources, gaining competitive advantages, and maximising your profit margins.
But what, exactly, does the concept refer to? Financial management involves planning, organising, controlling and monitoring exactly where your capital is going, and making sure that it’s in the most advantageous place at the most advantageous time. It should be a key process within your business, one that is factored into every business plan and long-term growth model you develop.
Sadly, however, it is too often neglected. This trend is largely attributable to its perceived complexity, yet there are many very simple means of making the most of your company’s finances…
Factor Finances into Your Business Plan
If you’re looking to achieve long-term success, then it’s imperative for you to develop an in-depth business plan. The financial aspect of your business should form a key part of this. This is a lot simpler than it sounds. Essentially, you need to detail how you intend to finance your enterprise. There is no need for complex formulas at this stage: simply take the time to calculate the money you’ll need, and then spend a while considering where you can get it from. This simple thought process should go a long way towards helping you clarify your financial goals.
Keep Your Accounts Up-to-Date
The best way to track expenses, debts and credit, apply for additional funding, and improve efficiency is to keep easily decipherable, up-to-date accounts. Provided that they’re accurate and contain all of the necessary information, your accounts are a brilliant resource for identifying and addressing any areas of business that are losing money, as well as the endeavours that are proving most successful. Use this information to pinpoint exactly what you’re getting right and where you’re going wrong, and utilise this data to maximise your profits overall.
Meet Tax Deadlines
Failing to meet your deadlines for tax returns and payments is the perfect way to guarantee that your business has to pay out unnecessary fines and interest. These costs are simply inefficient, and they’ll eat into your profit margin without any real cause. The best way to avoid this unpleasantness is to keep a log of deadline dates, and to make sure that any necessary information is filed well in advance.
Control Your Overheads
One very simple way of saving your business money is to perform a brief study of your overheads. Are there any ways that you could save energy to cut costs? If you can reduce the cash required to cover your heating, lighting, office equipment or air conditioning, then you’ve found an easy and environmentally friendly way to save money with very little effort required on your part.
Make Sure That You’re Paid on Time
A common financial problem amongst smaller businesses is overdue customer payments. There are lots of simple ways to remedy this. Firstly, it helps to have clear credit terms and conditions that are explained at the outset; you need to make it blatantly obvious that late payments won’t be tolerated so that people don’t try and take advantage. On your end, be sure to speed up the payment process by issuing immediate invoices that are clear, accurate and contain a payment date.
If you don’t feel comfortable taking care of this side of things yourself, consider using an invoice financing firm which can be found through Touch Financial. Invoice financing firms are a great way to improve your cash flow and will take care of customer payments for you.
How much could you save by improving your financial management?